Personal Finance – Real estate

Although, the local public real estate owners have delivered more or less mixed results for their stakeholders, the figures have been largely positive all the year round. As per the statistics, about five out of eight real estate investment trusts based in Chicago have delivered favorable results for the shareholders as on the 13th day of October. A unit of S&P Global Market Intelligence called SNL Financial recorded a 4.4 percent rise in the REIT index of the area.

Market situation of the REITs

Owing to the country’s strong and stable economy and relatively low interest rates, the REIT have witnessed a steady growth in demand for the local real estate among the investors who prefer to go for stocks that offer a hefty dividend. However, the overall market performance of the local real estate companies of Chicago has been largely varied, with an apartment owner returning a mere 8.6 percent to the shareholders on his Equity Residential to an industrial landlord offering a hefty 25 percent on his First Industrial shares. The BMO Capital Markets of New York managing director Paul Adornato remarked that considering the actual value of the real estate and returns and profits on the shares, the REITs can be rightly touted as an expensive option for the shareholders. In the wake of the recent market performance of the REITs, the BMO has awarded it a neutral rating. Adornato further added that since the demand for the real estate is witnessing a steady growth and the supply is fairly limited, the market situation is pretty much balanced.

The exception

Despite the current performance of real estate stocks, there is one exception to the scenario namely the Equity Residential that has ended up lowering its outlook for 2017 as a result of a meager growth in rent in the areas of San Francisco and New York, due to the huge problem of overbuilding. The Equity residential is an REIT based out of Chicago, founded and chaired by a billionaire Sam Zell. On the flipside, the First Industrial seems to be witnessing a lucrative phase owing to the excessive demand for industrial and warehouse spaces in the region. However, its growth or retardation will be largely influenced by how well the company manages to align its affairs despite a recent shuffling in the top management positions. Recently in the month of September, the erstwhile President of the company Bruce Duncan was replaced by UBS executive Peter Baccile.

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